Have you ever experienced one of those days wherein the water heater stops heating, dishwasher stops washing & your family ends up on a first-name basis with the nurse at urgent care. Then, as you are driving to work you see smoke seeping out from under your hood.

Bad things happen to the best of us, & instead of spacing themselves out, they almost always come in waves. It is important to have a financial life preserver, in form of an emergency cash fund.

Many people know that an emergency fund is an important resource but at the same time they area nit sure about how much to save or where to keep the money. Others wonder how they can find any extra cash to sock away.

HOW MUCH MONEY?

How much is enough to set a target amount for starting an emergency fund? Unfortunately, there is no “one-size-fits-all” answer.
The amount might depend on your financial situation and lifestyle. For example, you may be more likely to face financial emergencies if you own your home and if at all you face crisis such as a job loss or injury that affects your income, you may have a need to depend on your emergency fund.

COMING UP WITH CASH

If saving several months of income seems an unreasonable goal, do not despair.
Start with a higher target & build your savings at a regular interval. It might help to treat a transaction like a bill you pay each month. Set up an automatic monthly transfer and ensure you pay off any credit card debt before you begin to save.

Once your savings begin to build, you might be tempted to use the account for other purposes. Try to prepare a separately for bigger expenses according to your budget. Let your emergency money be separate from your checking account so that it’s harder to dip in.

WHERE DO I PUT IT?

Remember, an emergency fund should always be easily accessible. Modest rates of return are typically offered by savings account. COD might provide slightly higher returns But money would be locked away until the COD matures, which took be several months or years.

Money market funds are considered as low risk securities but it is not backed by any government institution so it is possible to lose money.

Money market mutual funds are sold by prospectus. Please consider the charges, risks, expenses and investment objectives carefully before investing.
A prospectus containing this and other information about the investment company can be obtained from your financial professional. Read it carefully before you invest or send money.

Unexpected expenses can occur anytime! But having an emergency fund may help you reduce the stress and worry associated with financial crisis. Consider taking steps today to create a cushion for the future.